The high court ruled 5 to 4 to dismiss a class action suit filed on behalf of 1.5 million female employees who charged they were subject to unequal pay and promotion practices at the retail giant. The suit potentially sought back pay and other damages totaling in the billions of dollars.

“Today’s Supreme Court decision sets back equality for women and for all Americans in the workplace and in our society,” House Democratic leader Nancy Pelosi said in a statement from Congress. “It will make it more difficult for workers to come together to fight claims of gender discrimination.”

“Those without means to hire an attorney or pursue a claim rely on class-action lawsuits to level the playing field and change the policies and practices of elite corporations,” he said. “The court’s sharply divided ruling has made it more difficult for these individuals.”

Closing a legal 'loophole'?

In dismissing the Wal-Mart class action, the majority justices determined that the 1.5 million members of the suing class lacked enough in common to justify conducting the litigation as a single, huge class-action lawsuit rather than as smaller, more focused, class actions, or individual suits.

“This decision makes it difficult for employees to use class actions for employment-discrimination claims unless they can point to a company-wide discriminatory policy,” Howard Erichson, a professor at Fordham Law School, said in a statement.

Other analysts said the decision closes a loophole that some plaintiffs' lawyers were exploiting to bypass tough restrictions on class-action litigation.

“Many class-action lawyers had smuggled damages class actions into court through the lenient standards for injunctive class actions,” said Vanderbilt Law Professor Brian Fitzpatrick in a statement. “The opinion today closes this loophole.”

“Courts will now have more leeway to refuse to certify class actions when they believe at the outset of the case that the case is unlikely to succeed,” he said.

“The conservative majority thought the evidence was very skimpy in this case, and this quite explicitly colored its view of whether the women shared a common question,” said Professor Fitzpatrick.

The judges' opinions

In the majority decision, Justice Antonin Scalia wrote that there was no evidence that Wal-Mart operated under a general policy of discrimination that affected all 1.5 million female workers. Instead, he said, Wal-Mart’s stated policy required equal employment opportunity.

The only evidence a discriminatory policy was the testimony of a sociologist who said Wal-Mart maintained a strong corporate culture that was vulnerable to gender bias, Justice Scalia said.

“[The sociologist] could not, however, determine with any specificity how regularly stereotypes play a meaningful role in employment decisions,” Scalia wrote. “At his deposition … [the sociologist] conceded that he could not calculate whether 0.5 percent or 95 percent of the employment decisions at Wal-Mart might be determined by stereotyped thinking.”

Scalia said that standard was “world’s away from significant proof that Wal-Mart operated under a general policy of discrimination.”

In her dissent, Justice Ruth Bader Ginsburg said the court should have upheld the lower court’s determination that the class action was justified. She said the company’s practice of granting local discretion in employment decisions could foster systemic discrimination.

“The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects,” she wrote. “Managers, like all humankind, may be prey to biases of which they are unaware.”

Justice Ginsburg added: “The risk of discrimination is heightened when those managers are predominately of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes.”

Women's rights groups call it a setback

“Particularly now, when families rely more than ever on women’s earnings, women need fair pay and fair opportunities for advancement,” she said. “Today’s ruling sets a dangerous precedent that will make it easier for employers – especially large ones – to discriminate against their employees while, at the same time, making it harder for workers to come together to challenge it.”

Nan Aron of the Alliance for Justice said the high court’s decision fits a pattern. “This is another in a long series of cases where the conservative majority has used a radical reformulation of the law to erect a wall of privilege and protection around big business,” she said.

Business groups applaud

“We applaud the Supreme Court for affirming that mega-class actions such as this one are completely inconsistent with federal law,” said Robin Conrad of the National Chamber Litigation Center.

She said the lower courts had “radically lowered the standard for certifying class actions, and opened the door to even more bet-the-business blockbuster class actions.”

Ms. Conrad said the ruling reinforced a fundamental principal of fairness. “Too often the class action device is twisted and abused to force businesses to choose between settling meritless lawsuits or potentially facing financial ruin,” she said. “Our economy would be better served if businesses could spend more resources creating jobs and fewer resources fighting frivolous litigation.”

Some analysts said the Wal-Mart lawsuit was an abuse of the class-action system. “The Supreme Court has said people cannot group together totally different legal claims into giant classes in order to intimidate businesses in settling through payoffs,” said Timothy Sandefur of the conservative Pacific Legal Foundation.

“By shooting down a costly and unjustified litigation threat, today’s ruling means lower prices for things we need, and more employment opportunities for all – especially women,” he said.